Highlights

• Despite public backlash, sustainable investing outpaced oil company profits and military share prices in 2023.
• Most investors aren't deterred by the general public opinion of ESG and sustainable investing. Especially since anti-ESG funds have all but died down or stalled.
• ESG is moving to standardized language, adding more creditability and clarity to the movement.

One of the biggest narratives that is driving a wedge between people and sustainable investments is the idea that sustainable investments are bad investment decisions. Whether it’s US Republican officials divesting from “woke” projects or people looking at green energy stock and getting buyers remorse, the general view is simple:

Green investing is something people might like to get behind, but it’s just not good enough compared to traditional investing.

But that’s not what other people are seeing. Whether it’s studies, internal analysis, or investors looking at the numbers more closely, everything is saying something different.

As we’re nearing the fourth quarter, investors who have held onto sustainable investments so far this year have had a really great year thus far.

In fact, they have been for some time.

2022 Was A Step Back, But It’s Bouncing Back

When a narrative is driven, general views and sentiments cling to that idea. Among investors closer to ESG and sustainable investments, interest and investment into those vehicles started in 2020 and 2021. This surge of interest fuelled some key decisions that would play a critical role in 2022.

First was the addition of new funds launching, expanding the options for sustainable investors to choose from. The second was that it caught the eye of the general public and politicians from around the globe.

2022 was a rough year because of those particular reasons, as the challenges that sustainable investments face now reared their head at that moment. Between greenwashing, US Republican officials began to call the movement “woke” and took steps to pull money away from sustainability.

Other individuals criticized the movement and as the problems became more glaring, ESG became more taboo among those who were vocal about it.

And it didn’t help that that ESG underperformed that year as oil prices spiked.

But ever since 2022, the narrative delivered to the public has always been that. After all, there was a lot of media coverage over ESG’s backlash, especially in the US. And with companies not wanting to face angry politicians, they delved more into greenhushing—the practice of downplaying or staying quiet about sustainability projects.

That is what happened because, despite oil-company profits breaking records and military share prices growing in 2023, sustainable investments outperformed even those without anyone knowing.

People Are Still Investing

Part of the reason for that growth is for the sheer fact companies and investors are still investing. Despite the negative sentiment or skepticism behind this, the capital investments being put into sustainable investments is expansive.

According to reports from Bloomberg New Energy Finance and the International Energy Agency, sustainable options like electric cars, green buildings and renewable energy are still seeing double digit growth in capital investments.

Beyond that, the push to make energy transitions is further encouraging investment behaviour to shift alongside it.

Anti-ESG Funds Stalling

Another clear sign is that when ESG was put into question in 2022, anti-ESG funds began to emerge during that time and started to gain traction. People like Vivek Ramaswamy touted his “anti-woke” investment fund as an alternative.

And overall, those funds received a surge of initial investments.

But those funds eventually began to decline. By the summer of 2023, a lot of them crumbled and have since left the stock market.

Language Is Being Standardized

What was also a slight criticism of ESG is no longer as big of an issue these days too. With the partnership between the CFA Institute, the UN Principles for Responsible Investments and the Global Sustainable Investment Alliance, a lot of language surrounding ESG and investment approaches is now mainstreamed across the globe.

The partnership came out with five approaches that remove a lot of confusion for new investors, normalizing conversations and making it more appealing for newcomers.

It’s Time To Push Forward

Despite the snags, sustainable investments are the future, as people are discussing them more and making decisions for themselves. People right now are seeing a lot of the broken parts of the world and countries economic systems and are in need of answers.

With things looking gloomier right now, we’re at just the right time to encourage investments into sustainable investing.

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